Multinational
banks are preparing to pay out billions of dollars in fines to settle
charges of foreign exchange manipulation. Some 19 investigations in ten
different legal jurisdictions are now winding their way to completion
and analysts says the final tally may hit $41 billion.

The first
set of settlements are likely to emerge in November in response to an
investigation by the Financial Conduct Authority (FCA) in the UK, which
has notified six banks that it wants to come to an agreement for them to
pay out 1.5 billion ($2.5 billion)

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"The discussion around a
potential U.K. settlement as well as certain U.S. banks taking related
provisions in their recent results suggests a kick-start towards overall
FX (foreign exchange) litigation settlement," Kinner Lakhani of
Citibank told Bloomberg. (His team came up with the estimate of $41 billion in a research report published last week)

Some
30 traders at these banks have been suspended to date over the last
year, although some have since been allowed to return to work. A lawsuit
filed earlier this year named a group that took part in an electronic
chat room dubbed "The Cartel" -- one of many where traders would collude
on fixing prices to increase profits. (Other chat rooms had names like "The Bandits' Club," "One Team, One Dream" and "The Mafia.")

Recently the regulators have gone into overdrive. Some 19 different probes are being conducted by a slew of agencies from around the world
including the Australian Securities & Investments Commission, the
European Commission, Bafin in Germany, Hong Kong Monetary Authority, the
Japan Financial Services Agency, the Commerce Commission in New
Zealand, the Monetary Authority of Singapore, Finma in Switzerland, the
Commodity Futures Trading Commission and the Department of Justice in
the U.S.

The banks have already started to warn their
shareholders of the size of the fines. In mid-October, JP MorganChase
was effectively the first to announce that it was going to need to spend
as much as $1 billion in legal costs over the next year, much of which is expected to stem from the foreign exchange scandal. (In July, UBS of Switzerland set aside $2.08 billion for future legal costs, although those provisions were related to a much wider variety of investigations.)

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